Wednesday, September 7, 2011

Why Small Businesses are Important for the Canadian Economy

Are you considering starting up or working for a small business? If so, you will be making a strong positive contribution to the Canadian economy. In recent years, small businesses across the country have played a crucial role in stabilizing the often volatile economy in Canada, and there are a variety of reasons why.

Small businesses are job creators. They have helped to create thousands of new jobs in Canada. According to statistics published by Statistics Canada in July 2008, small businesses alone have accounted for 37 percent of new jobs in the private sector between 1997 and 2007. Since 2008, these figures have shown a steady increase.

As of July 2011, 98 percent of all businesses in Canada are now considered as a small business, with 48 percent of the work force being employed by them. According to the July report, there are currently more than 2.4 million small businesses across Canada, a number which will surely increase over the next few years.

Employees of small businesses currently account for more than two thirds of the employment in five major industries:

• Non-institutional health care (89 percent);

• construction (76 percent);

• other varied services (73 percent);

• food and accommodations (67 percent),

• and forestry (67 percent).

These statistics are more than likely to increase, especially if the state of the Canadian economy improves. In addition to contributing to the increase of the country’s employment rates, small businesses are also an integral part of the GDP. Some statistics to consider - in 2006, small businesses made up roughly 23 percent of Canada’s GDP. This figure varied from one province to another, and it peaked at 27 percent in both British Columbia and Prince Edward Island.

Two years later, Saskatchewan’s small businesses accounted for 35 percent of the GDP, while BC placed second with 32 percent. Not far behind in third place was Quebec, with a 30 percent contribution. One of the main reasons why Quebec’s small businesses have made such a significant contribution to the GDP can be attributed to the fact that more than 56 percent of Canada’s small businesses are located in Quebec.

Although small businesses in Canada are important, there is quite a bit of work left to do to make it easy for businesses to succeed. The Canadian Federation of Independent Businesses (CFIB) has released its new report which highlighted four key areas:

• better labor laws,

• reduced taxes to help businesses grow,

• a reduction of red tape,

• and better spending on services for small businesses

Their conclusion is that the government needs to be more involved in order to make it a balanced economic environment for entrepreneurs. With the chaos in financial markets, the strong hand of the government is required to provide a stable platform so that many businesses can succeed. A private/public partnership is required in order to address each of these issues, one that benefits both owners and employees.

Small businesses are currently on the rise, and it is expected that many more will be established across the country in the coming years. Consequently, the more small businesses that exist, the great their contributions to the GDP as a whole will be. So, if you considering starting a small business of your own, there is no better time to do so than now.